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ECONOMIC DEVELOPMENT June of LATVIA 2015 REPORT

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MINISTRY OF ECONOMICS REPUBLIC OF LATVIA ECONOMIC DEVELOPMENT June OF LATVIA 2015 REPORT RIGA Ministry of Economics Republic of Latvia ECONOMIC DEVELOPMENT OF LATVIA REPORT RIGA JUNE 2015 Comments, questions or suggestions are welcome: Ministry of Economics of the Republic of Latvia Brīvības iela 55, Riga, LV-1519, Latvia Phone: 371-67013293 Fax: 371-67280882 E-mail: [email protected] Website: http://www.em.gov.lv Authors: O.Barānovs (overall compilation, 1., 4.1.1.), I.Skribāne (2., 3.1.3., 4.3., 5.2.), E.Gergelevičs (2., 3.1.4.), J.Salmiņš (2., 3.2.1., 3.2.2., 3.3.), L.Stelmaka-Leja (3.1.1., 3.1.2, 4.1.2., 4.1.3., 5.2.), G.Piņķe (3.3.), I.Šnīdere (4.2.), V.Skuja (4.4.), N.Ozols (5.1., 5.3.), A.Rožkalne, J.Ušpelis (5.4.), Č.Gržibovskis, R.Rimša (6.1.), G.Silovs (6.2.1., 6.8., 6.12.), D.Klinsone, M.Rone, L.Stauvere, D.Šikova (6.2.2.), M.Ivanova, V.Laizāns, A.Upīte (6.2.3.), K.Soms (6.3.), A.Leite, R.Meijers, I.Niedrīte (6.4.), R.Kņūtiņa, S.Soila, I.Strazdiņa, R.Špade (6.5.), M.Lūka, I.Šīrava (6.6), I.Lore (6.7., 6.8.), E.Fernāts (6.8., 6.12.), M.Jansons (6.9.), L.Neiders, (6.10.), I.Kabanova (6.11.), A.Krūze, M.Zondaks (6.12.), M.Ivanova, L.Kauliņa (6.13.), B.Mistre, J.Reinsone (6.14.), M.Drāke (6.15., 6.16.), D.Freimane (6.17.). All figures and data, unless indicated otherwise, have been obtained from the Central Statistical Bureau of the Republic of Latvia. The data of the European Union have been obtained from Eurostat. The data of the Bank of Latvia and the Financial and Capital Market Commission have been used in the description of balance of payments and the bank and monetary indicators of Latvia. The data of the Treasury have been used in the description of financial indicators. ISSN 1407-4109 © Ministry of Economics of the Republic of Latvia, 2015 Reference mandatory in case of reprinting and quoting Dear reader, The specialists of the Ministry of Economics have centralised examination in physics or chemistry in prepared a regular Report on the development of the secondary education. Likewise, the system for education national economy of Latvia. The first Report was issued of adults with clear financing model based on the needs in September 1994, the following Reports since 1995 of employers has to be established, and work-based were published traditionally twice a year – in June and learning shall be introduced in vocational education. December. Like the previous Reports, this one assesses The new programming period of the EU funds gives the economic situation, as well as provides forecasts on us an opportunity to invest 4.4 billion euro in the growth the prospects for growth of economy. and development of Latvia over the next seven years. It The gross domestic product in Latvia has increased should be noted that the planned most crucial aims of by 17.4% from 2010 to 2014, and it has been the most financing provided by the EU funds include increasing rapid increase among all Member States of the European the financial flow in research and development, Union. It gives evidence that the reforms in general have promoting the attraction of private investments, and been correct. However, we should not relax even for a activating co-operation between research institutions and while, as the global economic situation is rather fragile. entrepreneurs. Significant investments are planned for We see that the pace of growth slows down in Latvia the improvements of information and communications mainly due to geopolitical reasons, as well as the technologies and transport infrastructure which directly increasing competition within the domestic market of the affect the economic productivity, form the basis for the European Union. creation of new and well-paid jobs and increase in the In 2015, the economic growth of Latvia will be quality of living. closely related to global tendencies in our geopolitical Within the framework of activities implemented by region. The economic situation in the export market that the Ministry of Economics, approximately 800 million is so important for Latvia – in the EU – gradually euro will be available for targeted investments in the improves, while the exporters focusing on the Eastern modernisation and industrialisation of the Latvian markets are affected by the worsening economic situation economy. A significant increase of the EU funding is in Russia. Unfortunately, the consequences of the envisaged for promoting efficient use of energy, investing geopolitical issues will impede the economic growth in more than 300 million euro in the increase of energy Latvia also this year. Experts of the Ministry of efficiency in multi-apartment residential houses, public Economics forecast that the GDP growth might be and industrial buildings within the programming period. approximately 2% in 2015. In 2015, it is planned to launch such EU funding The geopolitical situation in the region and slow activities as Introduction of New Products and Technologies into growth of the economy in the European Union hinder Production (support for procurement of the equipment), investments and the increase of the export. Under such Access to International Trade Markets (participation in conditions, the most important role in promoting the exhibitions), Promotion of International Competition (national economic growth of Latvia is attributed to the ability to stands), Training of Employees, Competency Centres, Business improve competitiveness and ensure the accessibility of Incubators and Improvement of Heat Insulation of Multi- financial resources at all stages of business development. Apartment Residential Buildings. It is crucial to find the most effective ways to support It is essential to maintain the existing and develop the development of a knowledge-intensive economy, to new tax stimuli so that businesses would be willing to increase the competitiveness of companies across invest in the development of new and more profitable exporting sectors, to increase productivity and innovation products. The enterprise income tax exemptions capacity. The economic policy supporting the currently are applied to investments in procurement or development of the regions of Latvia, including creation development of new technological equipment for of new, well-paid jobs in the regions, will be just as production, research and development and large important. investment projects. It shall be noted that on 19 May this In order to prepare for and adapt to the significant year the Cabinet of Ministers upon proposal of the structural changes, it is necessary to undertake proactive Ministry of Economics restated and approved “The steps in the labour market. The Ministry of Economics Procedures of Approving and Implementing an Aided holds a view that the reforms started in the education Investment Project” that allow to continue the provision system shall be carried on, focusing on the increase of the of the state support to large investors as far as until 1 quality of acquisition of the physical and natural sciences October 2020. in the primary and secondary education, as well as on the To promote economic activities, it is significant that development of adult education. It is necessary to after long discussions we have managed to maintain the improve the contents of the subjects of the physical and micro enterprise tax, at the same time the social insurance natural sciences and introduce a mandatory elective of the employees of such companies has been improved. One of the priorities of the Ministry of Economics is The representatives of the Ministry of Economics and to improve business environment. The latest World Bank government institutions under its supervision continue research Doing Business 2015 has ranked Latvia 23rd among working on accession to the OECD, so that Latvia can 189 countries or 9th among the EU Member States. The become a full member of the OECD. In 2015, an in- World Bank has recognised Latvia as one of the TOP30 depth review on compliance of Latvia to the OECD countries that have implemented major reforms to guidelines regarding management of the state capital, the improve the business environment. Report on the Economy of Latvia and the Report on the Latvia has improved its performance in the fields of Consumer Policy in Latvia have been prepared and tax payment and real estate registration. Yet, in order to distributed. The Ministry of Economics actively takes improve the quality of the Latvian business environment part in development of new instruments, development of as fast as possible, it is essential to continue reforms in positions and policies in the area of its competence the judiciary, particularly in the area of commercial pursuant to the OECD guidelines and recommendations. dispute resolution and simplification of the insolvency The integration of the Latvian energy market in procedure. It is also necessary to reduce the bureaucracy Europe continues. The provisions of the Electricity Market burden on tax administration purposefully by reducing Law have already come into force, ensuring complete the number of procedures and the time required for opening of the electricity market. At the same time, we them. The quality and speed of implementation of the have launched a support provision system for poor and reforms will determine further competitiveness of the low-income households, as well as for families with many Latvian business environment and economy. Our target children, compensating for changes in electricity prices. in the coming years is to be among Top 20 countries in Likewise, the Ministry of Economics has implemented terms of favourable business environment. complex measures in order to restrict further increase of The Ministry of Economics continues its work on the the mandatory procurement component in the price of regulatory framework for protection of consumers.
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